San Diego's economic indicators brighten

But county still faces a bumpy, sluggish recovery through 2015

By Dean Calbreath, UNION-TRIBUNE
January 28, 2011 at 2:31 p.m., updated January 28, 2011 at 4:09 p.m.

San Diego's economic outlook brightened last month, fueled by rising local stock prices and an improving national economy, according to an index of leading indicators released today by the University of San Diego's Burnham-Moores Real Estate Institute.

But continuing weakness in the job market, consumer confidence and construction mean that the road to economic recovery will be slow and bumpy, according to USD economist Alan Gin, who compiles the forecast.

Speaking at the annual San Diego County Economic Forum, held on the USD campus, Gin forecast that the jobless rate will dip below 10 percent in coming months and that employers in the county will create 10,000 to 15,000 jobs this year, compared to 6,300 last year.

But he added that the jobs that were created last year only brought the county to the point where it was in 2000. Even if growth continues to accelerate,he said, it will probably take until 2015 to return to 2007 levels.

"We've lost about 10 years' worth of job growth as a result of this downturn," Gin said."In 2011, the hiring will be better than the job losses we've had in the past three years, but it will be very low by historic standards."

Of the six components of Gin's index, the weakest were the measurements of hiring, unemployment and home-building:

Job openings. An index of San Diego help-wanted ads maintained by Monster.com fell 4.2 percent in December, although it remains 8 percent ahead of where it was the previous year. Despite the slide, Gin predicts the county will create 10,000 to 15,000 jobs this year, compared to 6,300 last year.
Unemployment filings. New filings for jobless benefits jumped from 41,751 in November to 53,231 in December, although seasonal hiring helped bring the overall unemployment rate down from 10.4 percent in November to 10.1 percent in December. The jobless rate may spike in January, as often happens after holiday workers are laid off, but Gin predicts it will begin get even lower later this year.
Building permits. There was a slight slide in unemployment filings last month, bringing an end to the second-worst year for home construction on record. Only 3,342 permits were filed last year. That was a 12 percent jump from the 2,990 filed in 2009, the worst year on record, but 82 percent below the peak of 18,314 in 2003. Gin predicts that building permits will jump 50 percent to around 5,000 in 2011, but even if that happens, it will be the third-worst year on record.
Consumer confidence. The index of consumer confidence maintained by the Union-Tribune dipped 2.3 percent in December. But a three-month average of the index, which Gin uses to weed out volatility, rose a fraction of a percent, so he ranks this as a slight positive. On the other hand, Gin fears that rising prices may bring confidence levels down in coming months, as has happened in the past.
Stock prices. Local stock prices rose 18 percent last year, fueled by a five-month winning streak between August and December. Higher stock prices often provide companies with more capital to hire and expand, so the recent rise could have a positive impact on the economy.
The national economy. The national Index of Leading Economic Indicators has been rising for six months in a row and has been up for 19 out of the past 21 months.

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